Analysts see Thai stocks as gaining from Chinese stimulus

China’s economic stimulus should benefit several Thai industries indirectly and provide positive sentiment in the capital and money markets, pushing up the Thai bourse to 1,500 points, say analysts.
Kasikorn Research Center (K-Research) said China’s stimulus is divided into three parts: measures to support the stock market, real estate, and interest rate cuts.
“A major problem with the Chinese economy is low confidence,” said the think tank. “The recent measures still lack a catalyst for domestic consumption, which is critical for economic recovery.”
The size of the measures is considered minimal compared with the problems China is facing. In 2008, the Chinese government launched a stimulus worth 4 trillion yuan, or 15% of GDP. The latest stimulus package is worth only 3.3% of GDP, excluding the effects of the interest rate cut and real estate measures.
Measures to support the stock market should improve investment sentiment in the short term, but the long-term impact depends on the improvement of China’s economic fundamentals, noted K-Research.
Pi Securities said it expects many Thai industries to benefit from China’s economic stimulus, including petrochemicals, packaging, tourism and oil. For example, the petrochemical industry should see its spread improve in the short term.
Asia Plus Securities (ASPS) said the stimulus measures helped the stock markets in China and Hong Kong outperform other bourses this week. The measures will help China’s GDP growth rate reach its 5% target this year, said the brokerage.
These measures are expected to push the Stock Exchange of Thailand index above 1,500 points, noted ASPS.
“If the Chinese economy recovers, it will boost Thailand’s growth because China is Thailand’s second-largest market after the US, accounting for 15.5% of the country’s total export value,” said the brokerage in a research note.
Thai-made products account for 1.83% of total imports to the mainland, ranking 18th. In addition, more Chinese travellers are likely to visit Thailand with a healthier economy.
ASPS recommends investing in stocks that will benefit from the recovery of the Chinese economy, including the tourism, hotel and logistics sectors, such as Airports of Thailand (AOT), SCGJWD Logistics (SJWD), Erawan Group (ERW), Central Plaza Hotel (CENTEL), Minor International (MINT), and Triple I Logistics (III).
Electronic component makers are also recommended, including Hana Microelectronics (HANA), KCE Electronics (KCE), and Delta Electronics (Thailand) (DELTA). Other sectors likely to benefit include property development, construction materials, energy, food and beverages, and rubber.